Q3 2025 Haleon PLC Earnings Call
I remind listeners on the call that in discussions today. The company may make certain forward looking statements, including those that refer to our estimates plans and expectations. Please refer to this morning's announcement on the company's U K and SEC filings for more details, including factors that could lead actual results to differ materially from those expressed in or implied by any such forward.
Looking statements.
For endurance remarks, we'll take your questions, but I just listen to a webcast who'd like to ask question you can find the dial in details on page three of today's press release and with that I'll hand over to Don.
Thank you Joe and good morning, everyone.
We've made good progress in the third quarter driven by strong in market execution and the continued roll out of our innovation pipeline, leaving.
Leaving us on track for our full year guidance.
We delivered 3% organic revenue growth in the quarter with a good balance between price at one 8% on volume mix of one 6%.
Looking across the regions, we saw consistent growth and sequential volume improvement across EMEA, and Latam and Asia Pacific.
With emerging markets in both of these regions or 7% led by India and strong growth in a number of smaller markets, including Thailand and Malaysia.
In North America, despite the challenging consumer backdrop on consumption, we have outperformed the market each quarter this year.
With particular strength in or a house respiratory and digestive health.
Oral health was once again the standout performer.
I have friends to dine continues to drive penetration with strong growth in a number of key markets, including the U S, India and China.
In India, we are continuing to make good progress by expanding our reach through expert coverage, which is a 70% since the start of the year.
And we are bringing new innovations, including sense, it I'm probably nominal to market.
Our sensor dying offering for lower income consumers is now in over 500000 outlets across 10 towns and villages.
From a strategic perspective, we are making great progress against our objectives.
Outlined at our capital markets day.
From a growth perspective, we continue to focus on driving category growth through innovation like premium ization with a number of new market launches in Q3.
Speaker #1: 7% , led by India and strong growth in a number of smaller markets , including Thailand and Malaysia . In North America , despite the challenging consumer backdrop on consumption , we have outperformed the market each quarter this year with particular strength in oral health , respiratory and digestive health .
Clothing, the incidents treatment gap. I'm example, is ultra been nasal mist, which is saying I know that 80% repurchase intent amongst users.
Speaker #1: Growth was underpinned by innovation led Premiumization and geographic expansion . The key drivers of this were penetration growth in more than 80% of our major brand market combinations , high single digit growth on Sensodyne , more than two thirds of which came from volume and innovations including the Sensodyne Clinical platform and Pronamel kids and continued double digit growth on Parodontax driven by innovation and our continued successful rollout in China with exciting plans for continued innovations across our oral health business .
And the expanding reach to lowering Kim consumers with household penetration gains in India and Brazil.
Speaker #1: Oral health was once again the standout performer as Sensodyne continues to . Drive penetration with strong growth in a number of key markets , including the US , India and China .
We also continue to deliver against our value creation framework.
Our supply chain productivity agenda continues to move at pace.
We have made significant progress across service cost on inventory.
Speaker #1: In India , we are continuing to make good progress by expanding our reach through expert coverage , which is up 70% . Now let's look at the growth drivers , starting with our performance across the categories oral health continued to deliver strong growth , up 6.9% in Q3 .
And since the beginning of 'twenty 'twenty four we have reduced the number of our skus by 19% and we have improved overall equipment effectiveness by double digit.
This improves both gross margin and results in better working capital and improved cash conversion.
Speaker #1: The runway for future growth is strong . BMS grew 4.9% in Q3 , with double digit growth in Centrum . Key highlights were premium innovations , including Centrum daily kits in China and Korea , strength in Philippines from increased distribution of lower income consumer packs and expanding distribution of local brands such as Caltrate in Latin America .
On A&P, we continue to invest at healthy levels, as well as making progress on effectiveness and efficiency.
Well, we all focused on improving both contribution to revenue and R O y.
We are also continue to be disciplined in our cost base and are on track to deliver the remainder of our 300 million pounds target savings this year.
All of this provides us with flexibility and agility in our P&L, enabling healthy investment in our brands and further strengthening our innovation pipeline to drive future growth.
Speaker #1: In pain relief , we grew 3.7% for Q3 . Panadol was up high single digit , underpinned by outperformance in UK and southern Europe , improved consumption in Voltaren , supported by innovations including Volta med and New Natural herbal product growth in these brands , was partly offset by Advil , whilst consumption continues to improve following the activation of new campaigns , performance was impacted by short term supply constraint on liquid gels , which has now been resolved .
And finally, we are delivering on our capital allocation principles, having completed in the quarter. The 500 million pounds, we allocated to share buybacks for 2025.
Now, let's look at the quarter in more detail.
Organic revenue growth was 3.4% balanced between 1.8% from price and one 6% from volume mix.
Speaker #1: Respiratory health declined 1.8% , lapping elevated Covid cases in Pipeline accelerating net revenue management through strategic pricing . Price pack architecture and channel mix and reinforcing our relationships with partners through key activations and collectively , these actions , combined with our focus on ensuring inventory is in an appropriate level by the end of the year , sets us up well to return to growth next year .
I'll, even make so sequential improvement in the third quarter in EMEA, and Latam and Asia Pacific.
Reported revenue grew <unk>, 7% in the third quarter impacted by the drag from divestments of two 3% and no 0.4% from foreign exchange.
It's worth bearing in mind that this is the final quarter with a drag on reported revenue growth from announced divestments.
Now, let's look at the growth drivers starting with a performance across the categories.
Oral health continued to deliver strong growth up six 9% in Q3.
Growth was underpinned by innovation like premium amortization and geographic expansion.
The key drivers of this war.
Generation growth and more than 80% of our major brand market combinations.
High single digit growth on sensor dine.
More than two thirds of which came from volume and innovations, including the sense. It on clinical platform I'm pretty normal kids.
And continued double digit growth on power Dawn tax driven by innovation and a continued successful rollout in China.
With exciting plans for continued innovations across our all have business the runway for future growth is strong.
Dennis grew four 9% in Q3 with double digit growth in Centrum key highlights where premium innovations, including central daily kits in China and Korea.
Strength in Philippines from increased distribution of lower income consumer packs.
And expanding distribution of local brands such as power trade in Latin America.
In pain relief, we grew three 7% for Q3.
Canada was up high single digit underpinned by outperformance in U K and southern Europe.
Improved Penn Sumption invoked taryn supported by innovations, including Volta met our new natural herbal product.
Growth in these brands was partly offset by advil.
Whilst consumption continues to improve following the activation of new campaigns performance was impacted by short term supply constraint on liquid Joe's which has now been resolved.
Respiratory house declined 1.8% lapping elevated COVID-19 cases in Q3 last year.
The impact of declines in smoke his house moderated in Q3 compared to Q2.
<unk> continues to perform really well with nasal mates, bringing new consumers into the spray category in markets, including Sweden, Poland and the U K.
Ahead of this starts with the cold and flu season, we saw the sell in of cold and flu products.
In Q3, a relatively normal levels.
And digestive health grew two 1%, including grossing tonnes, thanks to innovations, including Tums gummy bikes plus.
Our strong performance and benefited that from my grow what feels good campaign and an improved performance from <unk> in India.
This performance overall was partly offset by a decline in nexium.
And finally therapeutic skin house, another declined 1.1% with strength in Bachelor ban in China, offset by a decline in Spanish, though from a weak mosquito season in Europe.
Turning now to the regions, starting with North America.
In North America, we delivered organic revenue growth of no, 0.4% driven by no 0.7% price with volume mix down <unk>, 3%.
In the quarter, we continued to drive market share with our consumption outperformance widening as we progressed through the year.
Organic revenue growth was driven by continued strength in our real house, driven by innovation, including pronominal clinical enamel strength and successful activations, including gum expert on Paragon tax.
Our back to the M. S performance with central both on a strong performance from benefit that in terms of.
All of this was partly offset by respiratory health, which declined due to the continued weakness in smoke his house.
And from pain with growth in both tower and offset by a decline in outflow that I mentioned earlier.
As we shed half yeah, we feel there is more growth to be had from our North America business. We are focused on a number of initiatives, which will drive stronger results. These include further strengthening our innovation pipeline.
Accelerating net revenue management through strategic pricing price pack architecture and channel mix.
And reinforcing our relationships with partners through key Activations.
And collectively these actions combined with a focus on ensuring inventory is in an appropriate level by the end of the year sets us up well to return to growth next year.
Turning now to Europe, Middle East Africa, and Latin America.
Organic revenue increased five 3% with sequential improvement in volume mix of one 8% and price at three 5%.
Growth was driven by innovation like premium amortization across the clinical platform on sensor dying pronominal kids on ultra been nasal mist.
Our strong performance in Vms with centrum or double digit underpinned by a number of new launches, including centrum vital plus nutrient.
And in pain relief, you know growth came from higher consumption of Altera and Panadol from innovation launches like bolt Tonight that I mentioned earlier.
Looking across the region Europe performed well with particular strength across the pharmacy channel, which makes up the majority of our revenue in the region.
Speaker #1: So, of the 200 to 220 basis point swing from Q2 to Q3, there are two main things to call out.
Whilst category growth has slowed we continue to outperform given our innovation and excellent in market execution.
Speaker #1: The first one is the drag from smokers. Health has halved. So in Q2, this was 160 basis points. The drag in Q3 is now 80 basis points.
Latin America grew double digit driven by Colombia, and Mexico. This was partly offset by weakness in Brazil, given the softer macro economic environment impacting category growth.
Speaker #1: Drag . And the remainder of the difference comes from better performance in oral health and digestive health . As I mentioned , if we then look forward to Q4 , if we're working on the assumption that we expect half two to be broadly similar to half one , that implies , as you said , around about a 1% decline in Q4 , and that reflects tough comparatives from the prior year .
Speaker #1: Turning now to Europe, the Middle East, Africa, and Latin America. Organic revenue increased 5.3%, with sequential improvement in volume mix of 1.8% and price at 3.5%.
And finally, turning to Asia Pacific.
Organic revenue increased five 1% with strong growth across India, and southeast Asia and sequential improvement in China.
Speaker #1: Growth was driven by innovation led Premiumization across the clinical platform on Sensodyne , Pronamel Kids and Otrivin . Nasal Mist , a strong performance in VMs with Centrum up double digit , underpinned by a number of new launches , including Centrum Vital Plus nutrient and in pain relief .
Across the region volume mix, which was up 4.4% and price was up no 0.7%.
Speaker #1: Obviously , we're lapping the launch of Ericsson , and we have some further action to do inventory . So I think when we look towards next year , as I said , we expect we expect the region to return to growth .
With a relatively stable consumer market backdrop, we continue to drive category growth and expand our offering to lower income consumers.
Speaker #1: You know , you talked about where it had been historically . We would you know , we would expect to get back to that level .
India delivered double digit growth. This was largely driven by strength in sensor dying as we further increased distribution and drive penetration.
Speaker #1: Growth came from higher consumption of Voltaren and Panadol from innovation launches like Volta that I mentioned earlier . Looking across the region , Europe performed well with particular strength across the pharmacy channel , which makes up the majority of our revenue in the region .
Speaker #1: I think, as I referenced in the overview, we feel really good about the actions that we're taking in North America.
We expect continued strong growth in the fourth quarter, driven by our sales force investment and an improving macro environment.
Speaker #1: Obviously next year we won't have the drag between selling and sell out . We would expect that to be , you know , we would expect that drag to kind of disappear .
Speaker #1: Whilst category growth slowed , we continue to outperform given our innovation and excellent in market execution . Latin America grew double digit , driven by Colombia and Mexico .
Also in the Cotai China's so mid single digit growth with continued strength in oral health Vms supported by key innovations, including couch rate for kids, bioterror, and 2% and spending big gold.
Speaker #1: But as I said , I think , you know , with Natalie , I mean , Natalie is bringing deep consumer expertise and execution .
Speaker #1: We're focused on net revenue management , you know , got new innovations coming to market . So I think we feel good about return to growth next year .
Speaker #1: This was partly offset by weakness in Brazil , given a softer macroeconomic environment impacting category growth and finally turning to Asia Pacific . Organic revenue increased 5.1% with strong growth across India and Southeast Asia and sequential improvement in China across the region .
Across China consumers continue to invest in health and wellness.
Speaker #1: So if I step out of North America and the US and talk about Asia-pac , I'd say overall we really pleased with our performance in Asia-pac .
We are well placed to capture on this trend given our focus on building trusted brands closing the incident treatment gap and innovation that premier monetization.
Speaker #1: We've got double digit growth in India . We've got mid-single digit growth in China . And actually in those markets , we continue to perform incredibly well .
Our products are available across different channels, including pharmacies hospitals and digital platforms, ensuring we kind of effectively serve a wide audience with different shopping habits did.
Speaker #1: Yes , we are lapping some phasing in the prior year in terms of North Asia , particularly given the price increase phasing that we put through in Japan last year .
Speaker #1: Volume mix , which was up 4.4% and price was up 0.7% with a relatively stable consumer market backdrop . We continued to drive category growth and expand our offering to lower income consumers .
Speaker #1: But actually , given the momentum in that region , given that we expect the macro environment to improve in India in Q4 , you know , on the back of GST and on the back of tax changes , as well as our activations and expanded distribution , I think we feel really good about that .
Digital has been a particular strengths growing 20% without online to offline platform growing 25% and representing representing a third of our ecommerce business.
Speaker #1: India delivered double digit growth . This was largely driven by strength in Sensodyne . As we further increased distribution and drive penetration . We expect continued strong growth in the fourth quarter , driven by a sales force investment and an improving macro environment .
We have now fully integrated the OTC joint venture and are realizing the benefits of a more efficient route to market, we expect growth in China to improve further in the fourth quarter helped by distribution on increased investment.
Speaker #1: And I'd say the same. I'd say the same in China as well.
Speaker #2: And Don, just to follow up and to confirm: so, no one-offs in the third quarter in your performance in North America?
Speaker #1: Also in the quarter . China saw mid-single digit growth with continued strength in oral health and VMs supported by key innovations including Caltrate for kids , Voltaire , 2% and Fenbid Gold across China .
Speaker #1: Yeah , I wouldn't say that . I mean , I'd say in , in Q3 that that's the quarter where we sell in our , you know , ahead of the season .
In the faster growing E Comm channel.
Turning now to our 2025 guidance, we expect organic revenue growth of around three 5%.
Speaker #1: So we're obviously shipping in terms of the season. We have a price increase that goes live early November in the U.S.
Assuming a normal cold and flu season.
In North America, we expect growth in the second half to be broadly similar to the first half with Q4, reflecting further action on inventory at slower growing channels. We expect this to be completed by the end of the year.
Speaker #1: So , you know , but I guess quarter three is still there's still quite a big time lag between those two pieces . And if you remember you know , in terms of tariffs , we always said that they were in the low tens of millions .
Speaker #1: Consumers continue to invest in health and wellness , and we are well placed to capture on this trend . Given our focus on building trusted brands .
Speaker #1: Closing the incident treatment gap and innovation led Premiumization . Our products are available across different channels , including pharmacies , hospitals and digital platforms , ensuring we can effectively serve a wide audience with different shopping habits .
Speaker #1: And we're taking supply chain actions to mitigate that . The other piece , obviously , that we see is the pricing , the pricing action that we're taking .
In Asia Pacific, We should see an acceleration in Q4, driven by strong growth in China and India.
And then EMEA and enough time, we continue to expect a good performance driven by Europe with market share gains offsetting a slightly softening macro picture.
Speaker #2: Thank you very much .
Speaker #3: Thank you . Our next question is from Oliver Nicolai from Goldman Sachs . Please go ahead .
Speaker #1: Digital has been a particular strength , growing 20% with our online to offline platform growing 25% and representing representing a third of our e-commerce business .
Speaker #4: Hi . Good morning , Don John . Rakesh , just two questions , please . First of all , a group level . You had a strong pipeline of innovation across many categories in this year .
And then Latin America, we are closely watching the macro environment, given the consumer precious in the region.
Speaker #4: In 2025 , looking at next year , how do you see the strength of the pipeline and is there any RX to Odyssey that we should expect as well for full year 26 ?
Finally, the pace of progress on our supply chain productivity initiatives provide us strong underpin to our expectation of high single digit organic operating profit growth.
Speaker #1: We have now fully integrated the OTC joint venture and are realizing the benefits of a more efficient route to market . We expect growth in China to improve further in the fourth quarter , helped by distribution and increased investment in the faster growing E-com channel .
Speaker #4: And then just going back to your guidance , I know it's early stage , but you did mention that you assume a normal cold and flu season .
In conclusion, we delivered a good performance in Q3.
Speaker #4: I know that, as you mentioned, the U.S. does not provide data at the moment, but perhaps anecdotally, how do you see things for the coming cold and flu season?
And remain on track to deliver our full year guidance.
Speaker #1: Turning now to our 2025 guidance . We expect organic revenue growth of around 3.5% , assuming a normal cold and flu season in North America , we expect growth in the second half to be broadly similar to the first half , with Q4 reflecting further action on inventory at slower growing channels .
We are pleased with the actions we are taking in the U S, which sets us up to return to growth next year.
Speaker #1: Yeah . So let me kind of take the the innovation pipeline question first . Oliver . So , you know , as I said , across across actually all of our categories , we've seen real strength in terms of our innovation pipeline from an oral health perspective .
We're continuing to invest behind our brands to build flexibility and agility in our P&L by unlocking productivity savings.
Speaker #1: The the clinical , the clinical range on on Sensodyne continues to perform really well in terms of bringing new users into the category .
All together this should give us confidence in delivering against our value creation framework and our medium term guidance.
Speaker #1: We expect this to be completed by the end of the year in Asia-Pacific. We should see an acceleration in Q4, driven by strong growth in China and India, and in a mere LATAM.
Speaker #1: We're actually , you know , gaining or holding share in more than 80% of our brand market combinations on Sensodyne . And actually , if you think about on clinical , we've got five variants on average , you've maybe got two of those variants in the market .
Now, let's turn to questions.
Operator, please can you open up the lines.
Okay.
Thank you if we just like to ask a question. Please press star followed by one on your telephone keypad to remove your question Crestar followed by two again to ask a question press Star one.
Speaker #1: We continue to expect a good performance driven by Europe with market share gains offsetting a slightly softening macro picture . And in Latin America , we are closely watching the macro environment , given the consumer pressures in the region .
Speaker #1: So actually there's huge , huge runway in terms of oral health . I also talked about , you know , nasal mist in terms of respiratory in terms of otrivin nasal mist .
And as a reminder, if he is using a speaker phone. Please remember to pick up your handset before asking a question.
Speaker #1: We are that innovation is recruiting new users into the category , you know , I referenced purchase intent is now over . You know , 80% .
Our first question comes from P. M Delmas from UBS. Please go ahead.
Speaker #1: Finally, the pace of progress on our supply chain productivity initiatives provides a strong underpinning to our expectation of high single-digit organic operating profit growth.
Thank you very much and good morning, Don drew in that regard.
Speaker #1: And we've obviously got further rollout behind that . And maybe , just maybe just to mention another one in in VMs . So on Centrum , you know , we have a new claim in terms of slowing cognitive aging that we've just launched , as well as , you know , Centrum Essentials and Daily Kit .
Two questions for me. Please the first one on the North America, Don I was wondering if you could talk a bit more about your performance in the region in the third quarter, which was clearly better than expected I mean, what were the main drivers behind this sequential improvement and were there any one offs a restart.
Speaker #1: So , in conclusion , we delivered a good performance in Q3 and remain on track to deliver our full year guidance . We are pleased with the actions we are taking in the US , which sets us up to return to growth next year .
Benefits, we should be aware off that's made up of flattered your performance in the region in Q3.
Speaker #1: So, actually, across all of that, I could talk about that across all of our categories. We have an incredibly strong innovation pipeline.
Speaker #1: We are continuing to invest behind our brands to build flexibility and agility in our personnel by unlocking productivity savings. All of this should give us confidence in delivering against our value creation framework and our medium-term guidance.
And still in North America looking ahead.
So your guidance for the second half to be similar to the first half it seems to suggest around minus 1% organic sales growth in Q4. So maybe if you could talk a little bit about the reasons for this are anticipated slowdown sequentially.
Speaker #1: That's that's actually performing really well . Not only for us , but is also growing the categories where we've launched it as well .
Speaker #1: I think from in terms of switchers , you know , we've always said that , you know , that would be on top .
And last question on North America, I know, it's early days, but for 2026.
Speaker #1: We don't need switches to , you know , in terms of our growth forecast . So , you know , I would focus more on , on the innovations that I've talked about in terms of driving growth .
Speaker #1: Now let's turn to questions . Operator please , can you open up the lines ?
What would be your expectations because looking at the last three years you have been growing by an average of let's say, 1.5% wondering if your ambitions to materially accelerate next year or is it is a 1.5% run rates.
Speaker #2: Thank you . If you would like to ask a question , please press star , followed by one on your telephone keypad . To remove your question , press star , followed by two .
Speaker #1: We have , you know , we have two that we're progressing . But , you know , I mean , it's it just continues .
Speaker #1: It continues to progress . I wouldn't I wouldn't take that into account in terms of our growth at the moment . I think if we look at the if we look at the second question , your question in terms of cost , cold and flu and our guidance , I mean , it's fair to say we have a great portfolio in cough , cold and flu .
And then the second question short one I promise on the Asia Pacific strong, but decelerating sequentially, despite India being up double digits. So it would be helpful. If you could shed some light on.
Speaker #2: Again , to ask a question , press star one . And as a reminder , if you are using a speakerphone , please remember to pick up your handset before asking a question .
Speaker #2: Our first question comes from Guillaume Delmas from UBS. Please go ahead.
The main moving parts behind this a slow down.
You sound confident about the Q4 uptick.
Speaker #3: Thank you very much and good morning , Don Joe . And Rakesh . Two questions for me , please . The first one on North America , Dawn was wondering if you could talk a bit more about your performance in the region in the third quarter , which was clearly better than expected .
You think you can maintain this momentum going into 2026, thank you very much.
Speaker #1: It's an attractive and relevant category for consumers . As you know , it's more seasonal . We have shared in the past , you'll see in the appendix we've shared our normal chart that we show for the US in terms of incidences , what you will see from that chart is obviously no two years are the same .
Thanks scam and good morning to you. So let me take let me take your three questions in turn and I'll start with I'll start with North America. So.
Speaker #3: I mean , what were the main drivers behind this sequential improvement ? And were there any one offs restocking benefits ? We should be aware of that may have flattered your performance in the region in Q3 .
As we said at the half year, we expect half two to be broadly similar to half one and were tracking inline with Iraq expectations.
Speaker #1: It depends on the size of the peak and the timing of the peak . Sometimes it can be in Q4 , sometimes it can be in Q1 .
Speaker #3: And still on North America, looking ahead. Your guidance for the second half to be similar to the first half seems to suggest around minus 1% organic sales growth in Q4.
As we know it's a challenging environment in the U S. We have out performed the market in terms of consumption every call. So they share with particular strength across oral house.
Speaker #3: So maybe if you could talk a little bit about the reasons for this anticipated slowdown sequentially. And last question on North America.
Digestif I'm not gap has actually widened as we've moved through the year.
Speaker #3: I know it's early days , but for 2026 , what would be your expectations ? Because looking at the last three years , you've been growing by an average of , let's say , 1.5% .
Obviously in our results that's been masked by the inventory movements of difference between sell in and sell out as retailers if manage them in inventory and working capital and if we look at Q3.
Speaker #3: Wondering if your ambition is to materially accelerate next year versus this 1.5% run rate? And then the second question, a shorter one, I promise, on Asia Pacific strong.
There's a few moving parts. So all of the 200 220 basis point swing from Q2 to Q3. The two main two main things to call out. The first one is the drag from smoke his house has hogged so in Q.
Speaker #3: But decelerating sequentially despite India being in double digits. So it would be helpful if you could shed some light on the main moving parts behind this slowdown.
Speaker #3: You sound confident about a Q4 uptake. Do you think you can maintain this momentum going into 2026? Thank you very much.
Two this was 160 basis points drag in Q3, it's now 80 basis points drag on the remainder of the difference comes from better performance in all health and digestive health.
Speaker #1: Thanks , Jim . And good morning to you . So let me take let me take your three questions in turn , and I'll start with I'll start with North America .
Mentioned.
If we then look forward to Q4, if we're working on the assumption that we expect half two to be broadly similar to half one that implies as you said around about a 1% decline in Q4 and that reflects tough.
Speaker #1: So as we said at the half year , we expect half two to be broadly similar to half one . And we're tracking in line with our expectations as we know it's a challenging environment in the US .
Speaker #1: We have outperformed the market in terms of consumption every quarter this year, with particular strength across oral health and digestive. And that gap has actually widened as we've moved through the year. If we look at Q3, there are a few moving parts.
Comparative from the prior year, obviously, we're lapping the launch of a rock song and we have some for the action to do.
<unk>. So I think when we look towards next year as I said, we expect we expect the region to return to growth and you know you talked about where it had been historically, we would you know we would expect to get back to that level I think is.
Dawn Allen: If we look at Q3, there's a few moving parts. Of the 220 basis point swing from Q2 to Q3, there's two main things to call out. The first one is the drag from smokers health has halved. In Q2, this was a 160 basis points drag. In Q3, it's now 80 basis points drag. The remainder of the difference comes from better performance in oral health and digestive health. As I mentioned, if we then look forward to Q4, if we're working on the assumption that we expect half two to be broadly similar to half one, that implies, as you said, around about a 1% decline in Q4 and that reflects tough comparatives from the prior year. Obviously, we're lapping the launch of Eroxon and we have some further action to do inventory.
As I referenced in the OS with you we feel really good about the actions that we're taking in North America I'm. Obviously next year, we won't have the drag between sell in sell out we would expect back to be you know, but we would expect that drag to kind of disappear.
But as I said I think you know with nationally I mean naturally is bringing deep consumer expertise and execution. We are focused on net revenue management, you know got new innovations coming to market. So I think we feel good about returning to growth next.
Yeah, So if I step pouch of North America, and the U S and talk about Asia Pac I'd say overall, we're really pleased with our performance in Asia Pac We've got double digit growth in India. We've got mid single digit growth in China and actually in those markets.
We continued to perform incredibly well, yes, we are lapping some phasing in the prior year in terms of North Asia, particularly given the price increase phasing that we put through in Japan.
Dawn Allen: I think when we look towards next year, as I said, we expect the region to return to growth. You talked about where it had been historically. We would expect to get back to that level. I think as I referenced in the overview, we feel really good about the actions that we're taking in North America. Next year we won't have the drag between sell-in and sell-out. We would expect that to be, you know, we would expect that drag to kind of disappear. As I said, I think, you know, with Natalie, I mean Natalie is bringing deep consumer expertise and execution. We're focused on net revenue management, got new innovations coming to market. I think we feel good about return to growth next year. If I step out of North America and the U.S.
Last year, but actually given the momentum in that region give them that we expect the macro environment to improve in India. In Q4, you know on the back of G. S T and on the back of them.
Tax changes as well as a sedation and expanded distribution I think we feel really good about that and I'd say the same I'd say the same in in China as well.
And Don just a follow up to confirm so no one offs in the third quarter in Europe.
Performance in North America.
Yeah.
Yeah, I wouldn't say that I mean, I would say in Q3, that's that's the core to why we sell in a you know ahead of the season. So we were obviously shipping and in terms of the season, we have a price increase that goes live early November in the U S.
So you know.
Dawn Allen: and talk about Asia-Pacific, I'd say overall we're really pleased with our performance in Asia-Pacific. We've got double-digit growth in India, we've got mid single-digit growth in China, and actually in those markets we continue to perform incredibly well. Yes, we are lapping some phasing in the prior year in terms of North Asia, particularly given the price increase phasing that we put through in Japan last year. Actually, given the momentum in that region, given that we expect the macro environment to improve in India in Q4 on the back of GST and on the back of tax changes as well as our activations and exposure, expanded distribution, I think we feel really good about that. I'd say the same in China as well.
Got it I guess quoted phrase there was still quite a big time lag between those two pieces and if you remember you know in terms of tariffs. We always said that they were in the low tens of millions and we are taking supply chain actions to mitigate the stay of the Pea.
So obviously the that we say is the pricing and the.
The pricing action that we're taking.
Thank you very much.
Yeah.
Thank you. Our next question is from Oliver Nicolai from Goldman Sachs. Please go ahead.
Hi, good morning.
The Undrawn in Russia are just the two questions. Please first of all a group level. The other strong product innovation across many categories. In this year in 2025 looking out to next year, how do you see the strength of the pipeline and is there any rx to OTC.
But you should expect US one for full year 'twenty six and then just going back to your guidance I know, it's early stage, but you didn't mention.
[Analyst]: Dawn, just to follow up and to confirm, so no one offs in the third quarter in your performance in North America?
How about you asked him of Nomura couldn't flu season, I know about the U S does not provide that type of a month, but perhaps anecdotally how do you see things for.
Dawn Allen: Yeah, I wouldn't say that. I'd say in Q3, that's the quarter where we sell in ahead of the season. We're obviously shipping in in terms of the season. We have a price increase that goes live early November in the U.S. It, I guess, Q3 still, there's still quite a big time lag between those two pieces. If you remember, in terms of tariffs, we always said that they were in the lower tens of millions, and we're taking supply chain actions to mitigate that. The other piece, obviously, that we see is the pricing, the pricing action that we're taking.
For the coming quarter afterwards season.
Yeah. So let me kind of take the the innovation pipeline question for all of US. So you know as I said across across actually all of our categories. We've seen real strength in terms of our innovation pipeline and from an overall health dispatch.
Tip, the clinical the clinical range on an sense Sudan continues to perform really well in terms of bringing new users into the category, where actually you know gaining or holding share in more than 80% of our brands market.
Combinations on the sense of dine and not cheap you think about on clinical we've got five variants on average you've maybe got two of those variants in the market. So actually there's huge huge runway in terms of all house I also talked about you know.
[Analyst]: Thank you very much.
Dawn Allen: Thank you. Our next question is from Oliver Nikolai from Goldman Sachs. Please go ahead.
[Analyst]: Hi, good morning. Dawn, Johan and Rakesh. Just two questions, please. First of all, at group level, you had a strong pipeline of innovation across many categories in this year. In 2025, looking at next year, how do you see the strength of the pipeline and is there any Rx-to-OTC that we should expect as well for full year 2026? Just going back to your guidance, I know it's early stage, but you did mention that you assume a normal cold and flu season. I know that the U.S. does not provide data at the moment, but perhaps anecdotally, how do you see for the coming flu season?
Nasal missed in terms of respiratory in terms of the ultrathin nasal mist, we all that innovation is recruiting new users into the category you know I referenced purchase intent is now is that you know, 80% and we've obviously got the role.
<unk> behind that.
And I, maybe just maybe just to mention I know the warning in Vms. So on center and you know I mean, we have a new plane in terms of slowing cognitive aging that we've just launched as well as you know <unk> centrum essentially.
Dawn Allen: Yes. Let me kind of take the innovation pipeline question first, Oliver. As I said, across actually all of our categories, we've seen real strength in terms of our innovation pipeline from an oral health perspective. The clinical range on Sensodyne continues to perform really well in terms of bringing new users into the category. We're actually gaining or holding share in more than 80% of our brand market combinations on Sensodyne. If you think about on clinical, we've got five variants; on average, you've maybe got two of those variants in the market. There is huge, huge runway in terms of oral health. I also talked about nasal mist in terms of respiratory, in terms of Otrivin Nasal Mist. That innovation is recruiting new users into the category. I reference purchase intent is now over 80%, and we've obviously got further rollout behind that.
And daily kit, so actually across all of our I could talk about that across all of our categories. We have an incredibly strong innovation pipeline. That's that's actually performing really well not only for us, but it's also growing the categories, where we launch.
That as well I think from in terms of switches you know we've always said that you know that would be on top we don't need switches to you know in terms of bad growth forecast them. So you know I would focus more on on the innovation side I've talked about in terms of driving growth we have.
Have you know we have to do with progressing the.
I mean, it's it just continue it continues to progress I wouldn't I wouldn't take that into account in terms of by growth at the moment I think if you. If we look at the if we look at the second question. Your question in terms of cough cold and flu.
And I guidance I mean, it's fair to say, we have a great portfolio and cough cold and flu.
It's an attractive and relevant category for consumers.
Dawn Allen: Maybe just to mention another one in VMs. On Centrum, we have our new claim in terms of slowing cognitive aging that we've just launched, as well as Centrum essentials and daily kits. Across all of that, I could talk about that. Across all of our categories, we have an incredibly strong innovation pipeline that's actually performing really well, not only for us, but is also growing the categories where we've launched it as well. I think in terms of switches, we've always said that that would be on top. We don't need switches in terms of our growth forecast. I would focus more on the innovations that I've talked about in terms of driving growth. We have two that we're progressing, but it just continues, it continues to progress. I wouldn't take that into account in terms of our growth at the moment.
As you know eight small seasonal.
We have shared in the past you see in the appendix, we've shed a normal chart that.
That we show for the U S. In terms of incidences, what you will see from not sure if there'll be seen no two years of the same.
It depends on the size of the peak and the timing of the peak sometimes it can be in Q4, sometimes it can be in Q1.
If you remember about a third of our business full cough cold and flu is in North America, we've got about half in EMEA Latam.
And the thing I would say the thing I would say about that is you know the variability of when not peak happens and the size of the peak that's the variability you know around the around 3.5% guidance for.
Yeah. So we plan for a normal season, but we obviously stay agile from a supply chain point of view in terms of is it better or worse.
Dawn Allen: If we look at the second question, your question in terms of cough, cold and flu and our guidance, it's fair to say we have a great portfolio in cough, cold and flu. It's an attractive and relevant category for consumers. As you know, it's more seasonal. We have shared in the pack. You'll see in the appendix we've shared our normal chart that we show for the U.S. in terms of incidences. What you will see from that chart is obviously no two years are the same. It depends on the size of the peak and the timing of the peak. Sometimes it can be in Q4, sometimes it can be in Q1. If you remember, about a third of our business for cough, cold and flu is in.
Thank you very much.
Thank you our next.
Next question is from David Hayes from Jefferies. Please go ahead.
Yeah.
Hey, good morning.
To follow up on Jeremy's question, why kind of the U S.
Maybe quantify or get the dynamics a bit more so so just to be clear that you're saying there wasn't really any pre buying into the price increases that you've taken in overland and cough and cold in the call.
Is that a is that.
If for some reason then just in terms of the channel dynamics.
I think maybe the growth rate comparisons in new channels, a record amount like Amazon and Walmart.
So that's the form of channels and is there an element of.
The shift continues to happen Amazon and Walmart stocking up more is it getting more of the market or then they really upset in that sense and then the second question is just on the supply chain cost savings and we're running to that plan in a very expensive is there any.
Incidents or evidence.
Ah the service levels. The sales performance through is it inevitably let's see the as you go through some of those changes they are awesome hindrances dissipate or would you say, it's a completely separate.
How old separate dynamics.
Yeah.
Yeah, Hi, David So I think you know I mean, I, obviously talks about the the pricing piece coming early November let me talk a bit more about some of the other moving parts in terms of inventory and AR and the.
Arnold dynamic so as you know we work closely with our retail partners on inventory levels. There isn't a one size fits all and it obviously depends upon consumption. So for example in the drug channel our inventories down double digit.
That compared to this time last year, but there'll be some faster growing channels like E com.
You know actually I mean inventory levels have increased as you would expect on the back of mall traffic and stronger consumption trends.
And just to say, there's obviously more work to do them in Q4 on inventory as I reference that our objective is to exit the year in a clean place on inventory.
And obviously grow on the back of that next year I think from a you know China dynamic I mean, we can see we continue to see really strong growth in the U S. Axiom on digital you know we were growing you know them.
Kind of double digit on Amazon and I think you know we continue to partner continue to partner really well.
And in terms of your other question in terms of supply chain I mean, as I talked about in the brief we're actually making progress across service.
Service cost and inventory and the reason that we're doing now we're working closely with our customers, but also with rolling out new supply chain, you know new systems and processes in terms of improving our forecast accuracy.
They are not so so helping us not only to reduce inventory, but also to improve service.
Thank you.
Okay.
Thank you. Our next question is from Jeremy If you I'll call from HSBC.
Your line is open.
Hi, good morning, Thanks for taking the questions I know, we've had quite a lot on the U S.
But I wanted to ask one more but more a general question on the consumer because it feels like it's a very.
Vacates it environment, where you've got sort of things that are doing well. So the things that struck me so perhaps you could.
Break your business down a bit and explain from a consumer standpoint, which what stuff is going well.
Or what things are going badly and why that's the case and then secondly, you could talk a bit more about China as you say Youll you could most of the way through this merger of the sales forces from the two businesses that you've bought together. So perhaps you could just talk about the progress that you've made and how you think you could.
Be more effective over the coming quarters is a bigger combined organization. Thanks.
Yeah. Thanks, Thanks, Jeremy So let me talk about the U S. For so I think you know from a from a consumer perspective I mean, we we have seen we have seen consumption in the market you know track down this year as I said, we are out.
Forming the mall peer on consumption I'm not gap has widened. So in Q3, you know we're outperforming you know around 100 basis points versus the mall hit So I think what well you know we're tracking well I think from a consumer perspective.
What's important for US is that we are across all channels, which we also that we all work and seamless shopping we have seen you know types of behaviors that we're seeing we're seeing consumers buy is a larger packs where the unit price.
<unk> is lower.
So saying consumers by lower price point packs for example from dollar stores, let's say, we were seeing them adjusting that purchasing behavior.
And you know across the piece and as I said, what's important to US is that we are across all channels. So that we can cater to that behavior and also that we have you know a variation around our price pack architecture.
In terms of China, I mean, we're really we're really pleased with the joint venture we have integrated the sales force that means that we are able to optimize our visits to retailers. It also means that we are expanding our distribution.
More tests in terms of cities in China, and we continue you know we continue to invest in that space and I'd say you know I referenced it in the brief we are across all channels in China, and we were actually out.
Reforming the market across every channel. So I think you know there's it there's a real underpin in terms of excellence and execution in that market.
Okay. Thanks very much.
Yeah.
Thank you. Our next question is from Sandy and piety from Jpmorgan. Please go ahead.
Thank you good morning, so I have two questions, but I'm, sorry, I just want to clarify something on the U S. So first of all thank you for providing clarity on the on Q4 expectation and that's you know just to put it simple you be.
T L getting at minus 0.5 foot.
The U S. This year and I think sellout is somewhere between minus one and minus one and a half so I.
And you think that trucks, who like it seems that you said and it's been better than you sent up yet you took about easy stock levels for next year. So I just want to understand this thought that Q and then my two questions first on them.
Latin America and EMEA, if you could talk about the pricing evolution, we've seen that our pricing has been a bit weaker and you were commenting about softness in consumer that's who we've seen sequential pricing deterioration should we expect that to continue and maybe as well whether that pricing in Apache.
Mentioning I think Japan.
It would improve or not in the fourth quarter. So that's on pricing and then my second question is on them.
For the year Sue.
I look catch what you said for Q4 minus one Europe and U S. Ah EMEA are good and then an acceleration in our pack I get to grew afraid that slower in Q4 for the nine months is that the right way as well. Thank you.
Yeah, Let's let me take let me take the I'll take the Middle question first in terms in terms of pricing I think what we always say when you know when we say a soft consumption environment, there's always the compact.
Take pressure increases the promotional activity increase says and as I talked about we see a shift in terms of consumer behavior, either buying larger packs cheaper unit price or smaller you know smaller packs in terms of smaller initial.
Outlay and that obviously impacts impacts pricing. The other thing I would say is that she in in EMEA in EMEA lifetime, we have seen sequential volume improvement this year, which I think is is good the other thing to say is why.
<unk> you know we are seeing softness in consumption actually in Europe with pristine resilience do you know what I'd say, we're holding our own on oral house is the one category you know that I've seen that is not seeing the same level of softness.
And the other thing to say in Europe is given our strengths in pharmacy channels. You know we were also you know we've also got the resilience around that as well.
I think when you know when I when I look at the outlook for the year, you know I talked about an acceleration in Asia Pac, particularly in India and strong continued growth in China in Europe, I talked about you know challenging consumption in some cash.
Great, but actually a resilient performance from us in terms of holding up Latam. We're obviously looking at you know, we're obviously monitoring the macro environment, whilst we had a good performance in Q3, driven by Colombia, and Mexico, you know that macro environment.
Thing that we're watching that closely you know I don't want to say I've talked through the moving parts in North America and what's important there is that half two is broadly similar to half one.
In terms of in terms of consumption in the U S and sell in and sell out I think what I would say as you know we we said at the beginning of the year. We had you know roughly 200 basis points difference between sell in and sell out we've seen Nat gas.
Right.
It progressed through the year and as you know as I told that's been different across different channels, depending upon the consumptions in those channels I think the other thing to say within a I mean, you know oral health continues to be strong consumption. We continue.
We see strong growth.
And indeed com.
I talked about our continued strength I mean, I talk 18 brands you know that for example, the wrong Amazon 16 of those we have a higher share online than we do offline. So I think that reflects the strength has been in that channel.
As I said Q3, we always have the sell in of cough cold and flu, but as we look to Q4 you know we we want to claim is not final gap in sell in sell out you know I, probably think about that depending upon consumption, it's probably broader.
Another week I think to come out and as I said, what's important for US is that we exit the year clean.
And we returned to growth in North America next year.
Yeah.
Thank you.
Thank you. Our next question is from cars from Kepler sure Brooks.
Your line is open.
Yes. Good morning, Thanks for taking the question I have a follow up question with regards to the contribution of innovations in the third quarter in and out of my two going forward because you'll hear that a lot of things that you and to share stick about partly already answered on it but.
Could you quantify a bit more to the contribution during Q3 some of the.
Some of the listing of it and then out it might develop in the quarters thereafter.
And then the second question is on pain, the pain franchise look better, but the U S was quite soft.
Can you speak about your paint franchise, skosh, well and actually if we look at the U S.
Thank you.
Yeah, Let me, let me take let me take the pace question. So.
And I think look we you know we've talked about we talked about Advair, we launched our no pain more gain campaign.
You know I mean in July this year.
That has you know we have seen improvement in some of our key metrics. So purchase intent is up the messaging around relevancy is also up and actually ahead of ahead of the benchmark, Yes, we did see some supply issues in the <unk>.
Third culture them in terms of Advair liquid Joe's, but that has now been resolved and I think you know an odd for what I would say, it's whilst its early days, we are seeing green shoots.
And in terms of you know in terms of some of the in terms of some of the metrics on an advil you know and I think that should give us confidence but it is you know is it is early days I think when we look at innovation.
You know I talked about it and you know we had a number of new market launches in Q3, you know that that's making a good contribution in terms of our growth and market expansion I talked about some examples earlier.
You know intends of Ah clinical range I would have been nice, though mast you know if I gave some of this I mean, you know across pain, if I referenced paying a bit more I mean, Voltaire and 2% in China are unnatural volt to match Kratos in Germany, you know.
And also on Panadol.
You know in terms, whether it's dual action or whether it's a pan adult full cam in Indonesia. So actually what you see is across every category innovation plays a really important role in our growth strategy not only in terms of reaching lowering can consume.
Ms. But also in terms of driving premium amortization through innovation and I think that the science and the strength of the product differentiation.
<unk> is also setting us apart in terms of driving growth. So this is a this is a really important growth lever the contribution to growth varied across the categories.
But we have significant headroom in terms of continued rollout across all of the pipeline of innovations that we have.
Thank you.
Yeah.
Yeah.
Thank you. Our next question is from it I'm a Nazi from BNP Powerbar and your line is open.
Hi, Good morning, Thanks for taking my question. So I have two please.
So the first one would be on how you view the category in general terms from the moment Italian came to market you were saying that consumer health is relatively insulated from don't trading pressures. This is a category where brands matter a lot.
As 2025.
Typically the U S market the evolution the changed your view in any sense on.
This category being.
I'm not so much affected by down trading.
And I guess a follow up question on that is that do you.
And in the past four to six medium term growth target has the regional composition of your growth expectation changed compared to 2022.
Do you expect less growth to come from North American more growth to come from the other two regions or not thank you.
Thanks, Nishu. So I think no I think in terms of consumer health and intensify in terms of our categories. I mean that that has incredible growth opportunity across all of our categories that we talked about at our capital markets day, whether it's broadening.
I reach to lower income consumers, whether it's driving premium amortization through innovation or whether it's closing the incidence treatment got so I think we continue to see huge huge headroom in terms of category category growth consumers all in.
Increasingly more away in terms of house them all focused on house, you know and then improving kind of daily lives in terms of in terms of how so I think I think that continues I think I would say oh, so compared to other categories.
We are a lot more resilient.
I mean, you you see that and you know if you think about or how.
You know its been pretty resilient they share in particular, obviously, we're not immune to the macro to the macro environment of course that will have an impact, but I think what's important is the relative resilience versus other categories that by the imports.
And so I think that would be one thing. So I think in terms about regional expectations. I mean, we continue to see runway in terms of emerging market growth and you see that in our performance in terms of North America.
The size of the North America consumer how small that the consumer trends that underpin that we you know we do see growth potential in North America. We have said that we think there's more runway to go in terms of what we've seen versus our historic tough.
And so now is the proactive actions that the team are taking you know to ensure that we unlock that growth.
And that it plays an important role in terms of by 4% to 6%. So I think yeah, we feel really confident in terms of our medium term guidance of 46% growth.
Okay. Thank you.
Thank you. Our next question is from Tom Sykes from Deutsche Bank. Please go ahead.
Yes. Thank you good morning, everybody I'm going to smoke the U S horse again, but just in terms of the drag from the drug channel in Q4 versus Q3.
Are you expecting that drag to be similar.
And then in terms of the.
Adjusting for next year on the drug channel.
Are you, saying that your inventories are in the right place for the existing drugs channel footprint.
Your inventories below where they would normally be because you're expecting the drug channel sell out to be worse next year.
And then please just on China.
Sorry, I may have missed what the offline online exposure you have is.
I'm sorry, whether you gave the sort of older you come this is sort of the large streaming new recon split.
If it's possible to have that please and just are you targeting 11 11 in a different way to last year, because that seems to be quite important.
China pick up please.
Yeah.
Yeah, Let me, let me take the China the China.
So as I as I talked about you know we are present across all channels.
Channels in China.
E Com represents broadly you know a third a third of our business.
Within a.
You know in terms of the different parts of that channel, obviously Dow in wheat growing you know that channel was growing very fast when we all growing you know incredibly fast on the back back online to offline at shield. So continues you know we we have strong presence there.
Also continues to drive strongly double digit growth I'm, you know I'm the same on E. Com. So I think we're across you know we see growth across categories, driven by innovation on Paragon facts and Vms in terms of D come in China, and I think you know we're well placed.
Two one lot that two are not that grow sending tens of 11 11, you're right. It isn't it is an important and then it's a good growth driver, we are increasing our investments and in not in in the quarter and not as you know one of the reasons that underpins our cause.
Siddons in terms of Q4 growth in China.
I think in terms of the U S. I mean, I you know I talked about it we're working closely with retailers across every channel in tone in terms of in ensuring that we exit the year. When you know with the right level of stock. So that we can grow next year, obviously, it's not.
An exact science because it depends on depends on consumption, but I think what we demonstrate thing is that we're working closely with being agile to what's happening in terms of the different dynamics. The other thing I would say is this dynamic is not is not new.
We have been dealing with this dynamic for a number of years quite successfully and we will continue you know we'll continue.
To work with that dynamic in terms of why we're seeing stronger growth in some channels I'm glad we're seeing less growth in other channels and as I said I think what's important for the U S is that we expect to see a return to growth next year.
Yeah, I'm, sorry to insist on that just that the drag from drug Q4 versus Q3.
Is that viewed as being similar in the U S.
Yeah, I think as I referenced as I referenced earlier.
You know in Q4, we still got more work to do in terms of ensuring that and then treat ons in the right place and you know I talked to Bob depending upon consumption. The way to think about say is broadly another week to come out in terms of inventory.
Okay. Thank you.
Yeah.
Thank you. Our next question is from Warren Ackerman from Barclays.
Your line is open.
Yeah, Good morning, Don.
A dry Warren here at Barclays. So I got kicked out for a little while so I didn't catch everything that was being set but can I just clarify a couple of things on the oral care business the six 9% in the quarter.
A bit lower than consensus Don is there anything weird going on with aquifer.
But then her business outside of sense of doing the work.
Calling out this quarter the first one and then secondly.
I want to say something about the promo environment that you're seeing in the U S. P. M S and maybe in Germany, showing both are picking up quite substantially just wondering whether you've got any.
Any comment on that and just finally on the inventory side of things you said that the again my bones, because already you said that you're outperforming the market in the U S 100 bed.
I think you said the 100 bips, but we can see that the U S and out of this quarter's down 1.5 side, you're outperforming by a 100 bips.
Turning to the U S market fell out this quarter is down two and a half for Sun and if that is the case.
Are you able to maybe highlight.
Boy the.
Well the market in the U S slowed sequentially, it's still not 100% clear.
On on that pace.
Yeah. So let me talk about or tell us I mean, you know what I think you're right. We have seen a softer performance from Accra fresh from done in Chicago, and obviously, we're lapping you know we're lapping the phasing the phasing them pricing.
Thing from the prior year and in Japan, but as I said I think you know we feel really positive about oral Pat yeah, we performing incredibly well, yes, you know in in market. So as I talked about where you see you know increased competition.
Sure.
And promo we're seeing some of that particularly you you know you referenced Bam mass so when consumption is soft.
Pass its competitive intensity increases and alongside that you know often probably no increases we are seeing that in vanasse mm in the U S. In terms of the inventory piece I mean, yes, you're right. The consumption has continued continue.
To drop.
In North America. So that you know the number that you quoted in in Q3 that would be that would be broadly consistent with what we're seeing and as I said, we you know we are outperforming the market by on you know around about 100 basis points in the quarter. The main you know the main.
Drag that's coming from I mean, you you told us about it I mean V. M. As you know we're seeing increased prime notes. That's one of the main reasons why the categories coming down the other categories talk about would be respiratory because if you remember we're lapping a COVID-19 spike.
Last year, so I think between those two categories that probably the biggest driver as you know in terms of why would the total market consumption. B you know lowering Q3 are worse in Q3 than Q2, but as I said and you know in terms of outperformance.
We continue to outperform and intensive consumption and that outperformance has improved every quarter they share in the U S.
Okay. Thank you could I just clarify one other thing don't just quickly I'm, sorry to sell and set out thing.
So the sell out we think we can say it was down 1.5% are the scope of the scanner data, but you.
Printed 0.4% organic growth so that looks like a 200 bed restock compared to a 200 bps destock in the first half so sequentially those 400 bips.
That includes the former you spoke food if you actually look at the kind of grocery stock is probably even higher than 200, 5300, bips and you're saying I think there are a lot of that is not one off.
Due to the fact that your inventories on that tree growing up more in the fast growing brief how does like Amazon.
So can you just clarify that the actually that is the case rather than the spring buying ahead of pricing or maybe kind of weird kind of really already ordering I'm, just I'm still not quite clear on that pace.
Yeah, I think I think there's a couple of things to say I mean, I reference that different channels. We're in different spaces I talked about you know, we we reduced inventories and in drug channel versus the prior year and we'd also seen an increase in inventory and grow.
Wing channels like Amazon, you know, which is the double digit in the quarter and the other thing to say I'll be seeing Q3, you've got the selling of cough cold and flu and I think that you know that that muddies the water a bit in terms of <unk>.
Sell in and sell out and nobody says that stock so through as we you know progressed through Q4, and then obviously, depending upon the season and we will see the restock, but I think the important message around this is that we are making progress in terms of you know.
In terms of reducing the gap between sell in and sell out we expect to finish the year in a clean position and we expect North America to return to growth next year.
Got you. Thank you.
Sure.
Thank you. Our next question is from Edward Lewis from Rothschild and car Redburn you May ask your question.
Yes.
Thanks, very much just two quick ones for me I guess, just looking at fully mixed growth.
Asia Pac.
<unk>, 4% this quarter on a seven 1% growth in the prior year.
I guess would it be some headwind potentially from GST in India soon.
Eventually the head on the sort of the.
The difference between the rural mix.
And then just on this could you reduction I see that's down to 19% now against minus 16, I think it was in each one.
How much impact would that have had in the quarter on volumes is that Youtube is.
Do we expect more SKU reductions going forward.
Yeah, So if I take I take the volume mix the volume mix question to.
In Asia Pac I mean, you know if you look historically.
Three quarters of VI gross two thirds to three quotes survived growth in Asia Pac is broadly in line. So I think it's a strong strong quality growth and we continue you know we continue to see that and that's an important piece in terms of reaching you.
Lower income consumers broadening distribution and you know that is driven by India, and China, and we see double digit volume growth in China.
And intend that the S. K U in terms of the S. K U P. C right, we're making really good progress on this you know and that is the key driver in terms of our productivity agenda. What we what we are doing as part of that exercise, whilst we all reducing.
The number of Skus well, we're also thinking about is how do we ensure that for the consumer and for the shops are a few things. One is that we have the the range of our portfolio in terms of the consume as one theme.
The other thing that we're doing is ensure that we're improving the shop ability of our displays and our products are easier to find on shelf. So yes, there's an efficiency play with the SKU reduction, which is helping to take cost out and remove complexity.
In our supply chain reduce inventory, but there's also a consumer benefit in terms of you know shocked today, let's say.
Improvement on shelf.
And being really clear in terms of what are the range of all of our products. So I'd say from a volume perspective, I think we're managing that you know, we're managing that really well you know and as we taking skus that what we're seeing is increased you know Sal.
So out of kind of a main rona or top Skus, which is what you would expect to say and I think in terms of GST in India actually we Didnt say a negative impact from not it's an incredible job that the Indian team have done in terms of.
Managing the execution of this you know across all of our packs at short notice. It's a reflection of the close partnership that we have with our customers with our distributors.
<unk> team has managed it incredibly well and as I said you know we would expect that you would expect the benefit from that in terms of consumer off take because we move into Q4 and as we move into next year as well.
Thank you.
Okay.
Thank you we have a follow up question from David Hayes from Jefferies. You May ask your question.
Hello.
Focus both American home for more time, if I can just in terms of.
Just going into the fourth quarter guidance of minus one on some of the things that you said, so broadly speaking I know I'm trying to simplify it too much but what is making the assumption that consumption will be basically flat year on year and then the one week.
The pharma channel.
It will be let's say 100 basis points of headwind and that's how you get to the minus wanted if you're thinking about the offtake shipment levels. Besides that neither the picture.
Okay.
I think I think consumption quite good quite difficult to call them and I think there's a few there's a few moving there's a few moving parts. The first thing is obviously, we've got price increase in a modest price increase going live early September.
We obviously need to see how the season plays out you know we've talked about the variability in the cough cold and flu season, and what we've said is you know globally on a full year basis that would be you know in terms of the variability.
The other side of a normal season that could be in the region of 50 to 100 basis points. So I think that you know that that's probably a big swing factor I think that you've got the price increase you know we could assume you know enough number no change in consumption, but honestly you know depending upon what Hal.
Often with cough cold and flu as I talked about that could be some variability around that you know and as I said I think the important message on North America is that we expect to end the year with clean inventory levels and get North America back to growth next.
Jack.
Thank you.
Yeah.
Thank you we have a follow up question from Warren Ackerman from Barclays. Your line is open.
Hi, Don again as we're in here just on pricing are you able to kind of indicate to a stone roughly when youre pricing lags in North America, how much pricing you're taking in.
How you feel your pricing.
Timing I guess relative to peers and are you building in any kind of elasticity assumptions on the on the on the volume elasticity assumptions walnut pricing that you'll take him that as Jim said, one one follow up and then the second one you might have mentioned this already on Brazil did you did you break down or can you break down what you'll seeing in Brazil by category.
The market is obviously slower but is there any kind of specific kind of category called out where you're seeing kind of more local competition.
Or any other kind of.
Change in trend in that country.
Yeah.
Yeah, I think in terms of the pricing.
The pricing goes live its effective at the beginning of November you know at Sitka.
It's across parts of our portfolio, we see it's kind of it's you know it varies across SKU, but I'd say kind of low low single digits him you know he's mainly across the oral health and cough cold and flu and I think we you know given that the market has moved and the others have.
Take comprised thing you know, it's it's hard to call on its elm elasticity, but I'd say given that the market is moving then you know you would expect to see a lower level of elasticity and as I said the strength of our brands. So why do you can see them as you know by our brands.
That buying it in terms of the science the strength of formulation and the differentiation in terms of you know the delivery of high brands and obviously the price thing is related to tariffs and you know as I said when mitigating the tariffs.
Through supply chain initiatives, and then there's a small amount of mitigation coming from price. If I think specifically about Brazil, I mean, it's well documented in terms of the macro environment in Brazil in terms of interest rates and the challenge the challenge for consumers I think Kim.
Brazil, you know, we have a strong performance well outperforming the market in terms of pain and van math, but the market is soft I think the area of weakness is specific they coming from you know actually in Brazil, but as I say I think you know across.
Across the last time, we have a strong performance in Q3 up double digit we continue to outperform but we are watching you know, we all watching the macro environment in Latam because they is changeable.
But you know I think long term lifetime remains you know will remain a key growth driver you know for us.
Sleep at all frankly.
Yeah.
Okay. Thank you there are no questions at this time I'll turn the conference back over to Todd I'll, then for any further remarks.
Okay, well. Thank you everyone for your time and interest in Helios, we look forward to meeting a number of U S higher up and coming conferences next Formula day will be on full year results in February if you have any further.
Questions. Please contact our Investor relations team. Thank you.
Yeah.